This blog post is part of the series – Rethinking Metrics: Avoid These Common Pitfalls in Measuring Software Engineers.

In software development, there’s always a push to measure and improve performance. Managers often look for clear indicators of productivity, and metrics like utilization rates seem like an obvious choice. But is keeping engineers fully occupied really the best way to gauge success? The short answer is no. In fact, it can harm team dynamics, creativity, and long-term outcomes.

Drawing from my experience in software development and leadership, I’ve seen firsthand how this metric can misrepresent engineers’ true contributions. Let’s dive into why Utilization Rate is a flawed measure and explore better alternatives.

Why Utilization Rate is a bad metric

• Being Busy doesn’t mean Being Effective : When you absolutely have to be utilized, busyness is rewarded, not value creation. Engineers could waste time on low-priority items or self-inflate their workload in an effort to appear productive. If much of the focus is on the output, it can result in considerable burnout and a decline in the quality of the output. The most critical contributions — designing better systems, mentoring teammates, or debugging complex issues — often don’t produce immediate results. These activities are often the ones with the least value in environments where everything revolves around utilization.
• Flexibility goes out the Window: A team running at full capacity has no room to maneuver. What do you do when an urgent bug needs fixing, or a last-minute request pops up? Without slack, everything comes to a grinding halt and priorities start to clash. A little breathing room can make all the difference when dealing with the unexpected.
• Creativity gets Stifled: Innovation is not forged in a pressure cooker. Engineers require the time to experiment, reflect, and improve their thoughts. A team that has been pushed to its maximum will not have the mental bandwidth to innovate or offer disruptive solutions. Instead, they’ll take the easiest route to check boxes to meet deadlines.
• Burnout becomes Inevitable: When engineers are always at capacity, they eventually run out of steam. Burnout renders them unable to perform to the best of their ability, and it impacts the overall harmony and efficiency of a team. The hidden costs to the organization are high turnover and decreased motivation.
• It’s about Outcomes, Not Hours: Utilization metrics are about activity, not impact. For instance, an engineer who dedicates only 50% of their time to building a feature that delights users creates more value than someone operating at 100% on tasks with little impact. It’s not the amount you’re doing — it’s the results you’re getting.

So this is a Better Way to Measure Productivity

Instead of chasing throughput, the organizations should adopt strategies that will measure meaningful contributions. Here’s how:

• Focus on Results Don’t worry about how jammed up a person is. Instead, measure results. Data-based metrics — customer satisfaction, system reliability and time-to-market for features — paint a prospective picture of success.
• Make Room for Slack Allow time for thinking, learning, and roaming. Slack time isn’t unproductive time—it’s what allows teams to be resilient and innovative.
• Quality over Quantity Focus on clean, maintainable code and well-thought out solutions. This promotes practices that minimize technical debt and build toward the long-term vision. Productivity is not about producing as many outputs as you can; it’s about producing the right outputs at a high level.
• Establish Sustainable Work Practices Promote a culture where work-life balance matters. Encourage engineers to take breaks, set boundaries, and avoid crunch time. Healthy teams are more productive in the long run.
• Long-Term Focus Make sure every task supports bigger organizational objectives. Engineers show up better when they can see their work makes a difference. That alignment maintains motivation and directs effort where it best serves the organization.

Conclusion

While that sounds great on paper — 100% utilization — it’s an erroneous approach in practice. Great teams balance load with flexibility, and focus on meaningful outcomes not busywork. Reimagining metrics and aligning them with the true drivers of success lays the foundation for engineers to thrive and achieve remarkable performance.